Version 21 - April 2026 (CUD release)

Financial Period Type: 12-Months (Annual)
Target Industry Type: Manufacturing, Services, and Generic (excluding Financial Services)

Legislative updates

Accounting Standards for Business Enterprises Interpretation No.19
Notice on Further Implementing the New Insurance Contract Accounting Standards
Sustainability Disclosure Standards for Business Enterprises – Basic Standards (Trial) and Application Guidance
Sustainability Disclosure Standards for Business Enterprises No.1 – Climate (Trial)

Related accounting standards:
Accounting Standard for Business Enterprises (“ASBE”)
No.2 — Long-term Equity Investments,
ASBE No.13 — Contingencies,
ASBE No.20 — Business Combinations, and
ASBE No.33 — Consolidated Financial Statements.
In business combinations not under common control, the acquiree and acquirer may agree contractually that the acquiree will compensate the acquirer for certain contingencies of the acquiree, or for uncertainties relating to specific assets or liabilities. The acquirer therefore obtains an indemnification asset.

Under Acquirer’s Consolidated Financial Statements
When the acquirer recognizes the indemnified item in its consolidated financial statements, it shall simultaneously recognize an indemnification asset, measured on the same basis as the indemnified item. The acquirer shall consider management’s estimate of collectability and deduct expected uncollectible amounts from the carrying amount of the indemnification asset.
If the indemnification relates to assets or liabilities recognized at the acquisition date and measured at fair value at that date, the acquirer shall recognize the indemnification asset at the acquisition date and initially measure it at its fair value. This fair value should have already considered the uncertainty in future cash flows, so no separate collectability assessment is needed.
If the indemnification relates to assets or liabilities not recognized on the acquisition date or not measured at fair value at that date, the recognition and measurement of the indemnification asset shall follow the same assumptions as the indemnified item, subject to any contractual limitations on the indemnity amounts and management’s collectability estimates.
If the indemnification relates to a contingent liability of the acquiree that was not recognized at the acquisition date due to fair value not being reliably measurable, the acquirer shall not recognize the indemnification asset at the acquisition date. Instead, when the contingent liability meets the conditions for recognizing a provision after the acquisition date, the acquirer shall recognize both the provision and the corresponding indemnification asset.
If the indemnification relates to an acquiree asset not measured at fair value at the acquisition date (such as deferred tax assets), the acquirer shall recognize the corresponding indemnification asset using the same basis as that asset.
At each subsequent reporting date, the acquirer shall measure the indemnification asset on the same basis as the indemnified item, subject to any contractual limitations on its amount. If the carrying amount changes, it shall be adjusted accordingly, with the difference recognized in investment income.
For indemnification assets not subsequently measured at fair value, the acquirer shall also separately assess the collectability; expected uncollectible amounts shall be recognized in investment income.
When the acquirer collects, sells, or otherwise loses the right to the indemnification asset, it shall derecognize the asset. Any difference between the consideration received and the carrying amount shall be recognized in investment income.

Under Acquirer’s Separate Financial Statements
When obtaining an indemnification asset, the acquirer shall account for it in its separate financial statements in accordance with ASBE 13 — Contingencies and this Interpretation.
When the conditions for recognizing a contingent asset as an asset are met (i.e., the inflow of economic benefits is virtually certain and the amount can be reliably measured), the acquirer shall recognize the indemnification asset while reducing the initial cost of the long‑term equity investment. Debit “Indemnification Assets” and credit “Long‑term Equity Investments”.
At each subsequent reporting date, the acquirer shall measure the indemnification asset based on ASBE 13 and this Interpretation, considering any contractual limitations and collectability. Expected uncollectible amounts shall be recognized in investment income.
When the acquirer collects, sells, or otherwise loses the right to the indemnification asset, it shall derecognize it by debiting “Bank Deposits” (or similar) and crediting “Indemnification Assets”. Differences are recorded in “Investment Income”.
Enterprise shall use the account “Indemnification Assets” and present such assets in the balance sheet under “Other Current Assets” or “Other Non-current Assets” according to its liquidity.
Enterprise is required to disclose the relevant contract terms, amounts, impairment treatment, and financial impact.
When an enterprise first applies this Interpretation, any indemnification assets that exist as of the effective date of this Interpretation shall be retrospectively adjusted as a change in accounting policy in accordance with ASBE No. 28 — Accounting Policies, Accounting Estimates and Errors. For indemnification assets that have already been recovered, sold, or whose rights have otherwise been lost prior to the effective date, no retrospective adjustment shall be made.

Related accounting standards:
ASBE No. 2 — Long-term Equity Investments,
ASBE No. 20 — Business Combinations, and ASBE
No. 33 — Consolidated Financial Statements.
When an enterprise disposes of a subsidiary originally acquired through a business combination under common control and loses control, regardless of whether the counterparty is a related party or not, the capital surplus arising from the difference between the initial investment cost and the carrying amount of the consideration at the combination date shall not be transferred to profit or loss or retained earnings in either separate or consolidated financial statements.
When an enterprise first applies this Interpretation, it shall apply this requirement retrospectively in accordance with
ASBE 28
. Disclosures on relevant information are required.

Related accounting standards:
ASBE 22 — Financial Instruments: Recognition and Measurement and
ASBE 23 — Transfer of Financial Assets.
Unless the provisions of paragraph 10 of
ASBE No. 22 — Financial Instruments: Recognition and Measurement
regarding the recognition and derecognition of regular‑way purchases or sales of financial assets apply, an enterprise shall recognize and derecognize financial assets and financial liabilities at the following points in time:
Recognition of financial assets or financial liabilities occurs when the enterprise becomes a party to the contractual terms of the financial instrument.
A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or when the financial asset has been transferred and the transfer meets the derecognition criteria under
ASBE No. 23 — Transfer of Financial Assets
.
A financial liability is derecognized on the settlement date (the date on which the present obligation has been extinguished or the derecognition criteria under paragraph 13 of
ASBE No. 22
are met), except where the enterprise elects to apply the special derecognition provisions for financial liabilities settled through an electronic payment system.
When an enterprise settles a financial liability (or a portion thereof) in cash through an electronic payment system, it may elect to derecognize the liability before the settlement date only if the enterprise has initiated the payment instruction and
all
of the following conditions are satisfied:
The enterprise has no practical ability to revoke, stop, or cancel the payment instruction.
The enterprise has no practical ability to withdraw the cash designated for settlement as a result of the payment instruction.
The settlement risk associated with the electronic payment system is not significant.
An enterprise that elects this accounting policy shall apply it consistently to all settlements processed through the same electronic payment system.
When an enterprise first applies this Interpretation, it shall apply this requirement retrospectively in accordance with
ASBE No. 28
. The cumulative effects shall be adjusted to retained earnings and other relevant financial statement line items as of January 1, 2026, and comparative financial statement amounts for prior periods need not be restated.

Related accounting standards:
ASBE 22— Financial Instruments: Recognition and Measurement and
ASBE 37 — Financial Instruments Presentation.
Components of interest
When assessing whether contractual cash flows are consistent with a basic lending arrangement, enterprises shall focus on what the interest compensates, not how much. Cash flows linked to non‑basic‑lending variables (e.g., equity values, commodity prices, or cash flows representing a share of debtor’s income/profit) are inconsistent with a basic lending arrangement.
Cash flow changes arising from contingent features
If the contingency relates directly to changes in basic lending risks and costs, and the direction of cash flow changes is aligned, then cash flows remain consistent with principal and interest.If not directly related (e.g., interest rate decreases when the borrower meets carbon-reduction targets), then cash flows qualify as principal and interest only if under all possible scenarios they do not differ significantly from a similar instrument without the contingent feature.
Enterprises must disclose, for contract terms whose cash flows vary due to contingencies not linked to basic lending risks and costs:
the nature of the contingency
the possible cash‑flow impact, and
the carrying amounts of affected financial assets and liabilities.
These disclosures should be made by category, with an appropriate level of detail and explanations to help users understand the quantitative information.
When an enterprise first applies this Interpretation, it shall apply this requirement retrospectively in accordance with
ASBE 28
. The cumulative effects shall be adjusted to retained earnings and other relevant financial statement items as of January 1, 2026, and comparative financial statement amounts for prior periods need not be restated.

Related accounting standards:
ASBE 37 — Financial Instruments Presentation
Enterprises shall disclose, at minimum by category:
Fair value at period-end,
Fair value changes during the period,
Separate disclosure of changes relating to derecognized investments and those still held,
Amounts of cumulative gains or losses transferred out of equity upon derecognition.

The standards set out a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements).
The Notice mainly makes simplified provisions in the following four aspects:
One is to simplify the evaluation of the profit and loss situation of insurance contracts, the recognition of cash flow assets obtained by insurance, the judgment of the recognition time point of reinsurance contract groups with proportional liability, and the accounting treatment of insurance contracts that need to be terminated due to hesitant withdrawal in the same accounting year after initial recognition.
Secondly, in terms of insurance contract measurement, simplified provisions are made for the measurement of policy pledged loans, accumulated interest, matured receivables or payables to policyholders, non-financial risk adjustments, options, and guaranteed benefits, the measurement of cash flows from reinsurance contract performance and contract service margins, the application conditions of the premium allocation method and the measurement of foreign currency cash flows from insurance contracts under the premium allocation method, the recognition of losses amortized from reinsurance contracts, and adjustments to accounting estimates made in period financial statements.
Thirdly, in terms of insurance contract reporting, simplified disclosure provisions are made for the balance adjustment table of current reinsurance amortized unexpired liability assets and reinsurance amortized claims assets, the adjustment table of performance cash flows and contract service marginal balance of reinsurance contracts, the adjustment of cumulative amounts of relevant financial assets measured at fair value with changes recognized in other comprehensive income recognized in other comprehensive income, and the amount that policyholders can request repayment at any time.
Fourthly, in terms of connection regulations, simplified provisions are made for the presentation of comparative information when implementing the new insurance contract accounting standards for the first time, the application of simplified connection processing methods under the modified retrospective adjustment method, and the determination of transition dates.
Effective on January 1, 2026. Early adoption is permitted. Insurance companies that have already implemented the new accounting standards for insurance contracts in advance before the implementation of this notice shall report in written format to the
Accounting Department of the Ministry of Finance
and the
Institutional Supervision Department of the State Administration of Financial Regulation
on the situation of early implementation before June 30, 2025.

The standards set out the core content requirements for a complete set of sustainability-related financial disclosures and requires an entity to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. The effect on the entity’s prospects refers to the effect on the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term.
In order to help the main users of general-purpose financial reports make decisions related to the provision of resources to entities, the core content of the standards include four aspects: governance, strategy, risk management, indicators and objectives:
the governance processes, controls and procedures the entity uses to monitor, manage and oversee sustainability-related risks and opportunities;
the entity’s strategy for managing sustainability-related risks and opportunities;
the processes the entity uses to identify, assess, priorities and monitor sustainability-related risks and opportunities; and
the entity’s performance in relation to sustainability-related risks and opportunities, including progress towards any targets the entity has set or is required to meet by law or regulation.
In September 2025, the MOP issued the Application Guidance of Sustainability Disclosure Standards for Business Enterprises – Basic Standards (Trial). It includes eight sections on value chain, information connection, sustainability information users, materiality assessment, proportionality principles, the current and expected financial impact of sustainability-related risks and opportunities, the resilience of the enterprise’s strategy and business model to sustainability-related risks, and sustainability impact disclosures.
The standard can be applied on a voluntary basis before its specification of scope and requirements of implementation is announced.

The core content of the standards include four aspects: governance, strategy, risks and opportunities management, and metrics and targets, which sets out the disclosure objective for:
climate-related governance. It stipulates the information that enterprises must disclose regarding governing bodies or individuals, management personnel, integrated disclosure of governance information, and requirements for third‑party assurance;
climate‑related strategy. It specifies the requirements for disclosing information on climate‑related risks and opportunities and how they affect an enterprise’s strategy and decision‑making, current and anticipated financial impacts, and climate resilience;
managing climate‑related risks and opportunities. It clarifies how enterprises should disclose the processes for managing such risks and opportunities, and the extent to which these processes are integrated into the enterprise’s overall risk‑management framework, along with requirements for integrated disclosure; and
industry‑agnostic climate-related metrics, industry‑specific metrics, climate‑related targets, and the accounting basis for greenhouse‑gas emissions.
The standard can be applied on a voluntary basis before its specification of scope and requirements of implementation is announced.

Early adoption availability

Optional content changes